“Despite a brief return to target in December, headline inflation is likely to hold below 2% for most of 2019 as temporary factors fade. We look for inflation to revert back below 2% January, recovering back to target in November 2019,” argue TD Securities analysts.
Key quotes
“This profile is less optimistic than the BoC’s MPR projections. Factors pointing to a slow recovery in inflation are shelter, resource costs and growth dynamics.”
“Meanwhile, RRBs still look exceptionally cheap here. As we move closer to the end of the month, the backdrop will become more appealing for long breakeven positions, with carry on D50s just -0.5 bps during the month of February before it swings positive in March.”
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